Drug Tax FAQs
Drug Tax Stamps
The only location you can purchase drug tax stamp(s) at is the following location:
Taxpayer Assistance Center
Scott State Office Building
120 SE 10th Avenue
Topeka, KS 66612-1103
There are two reasons why illegal drugs are taxed:
- Taxing the Underground Economy - The fact that the business of dealing marijuana and controlled substances is illegal does not exempt it from taxation. Legitimate business transactions are taxed. Dealing drugs is a large part of a previously untaxed underground economy.
- Providing a Source of Revenue - 25 percent of drug tax collections are allocated to the State General Fund.
An individual is classified as a drug dealer and is liable for the payment of drug taxes if he/she manufactures, produces, ships, transports or imports into Kansas or possesses:
- more than 28 grams of marijuana (processed or marijuana plants) or
- more than one gram of any controlled substance sold by weight
- 10 or more dosage units of a controlled substance sold by dosage units such as pills or capsules
Drug dealers, as defined above, are required by law to purchase tax stamps from the Department of Revenue's Division of Taxation - Miscellaneous Tax (K.S.A. 79-5204). In order to protect against any possible violation of the self-incrimination constitutional protection, a dealer is not required to give his/her name or address when purchasing stamps and the department is prohibited from sharing any information relating to the purchase of drug tax stamps with law enforcement or anyone else. Payment of the drug tax (the purchase and affixation of stamps) is due immediately upon acquisition or possession by the dealer. The stamps are valid for 3 months from the date of issuance. If drugs are seized without stamps or the stamps which are affixed have expired, the possessor is liable for payment for the tax as well as a penalty of 100 percent for payment of the tax. For example:
Drug tax assessment: 10
grams of cocaine x $200 per gram = $2,000
Penalty: $2,000 x 100% = $2,000
Total Liability: $2,000 + $2,000 = $4,000
Pursuant to K.S.A. 79-5202, the tax rates are:
- Processed: $3.50 per gram or portion of gram
- Wet Plant: $0.40 per gram or portion of gram
- Dry Plant: $0.90 per gram or portion of gram
- Controlled Substance/gram or portion of gram: $200/gram or portion of gram
- Controlled Substance/50 dose unit or portion of unit: $2,000/50 dose unit or portion of unit
There are both criminal and civil penalties.
- Failure to pay the drug tax is a felony punishable of up to five years and/or a fine of up to $10,000.
- Failing to purchase and affix tax stamps to illegal drugs may result in the issuance of a jeopardy tax assessment and tax warrant by the Department of Revenue against the drug dealer based upon the amount of the drugs seized pursuant to K.S.A. 79-5205 and K.S.A. 79-5212. The fact that the assessment is a "jeopardy assessment" allows for the initiation of collection activities immediately. Execution of the tax warrant may involve the seizing and selling of the drug dealer's property to satisfy the drug tax liability. In other words, the drug dealer subjects his/her property to possible seizure by failing to purchase and affix the necessary drug tax stamps to the drugs. In addition, the tax warrant, once filed by the clerk of the district court, serves as a lien against the drug dealer's real estate. This prevents the drug dealer from selling his/her real estate without first satisfying the drug tax liability. Laws exempting personal property from seizure do not apply to seizure pursuant to drug tax warrants.
Yes. The drug dealer has 15 days from the date of assessment to request a hearing before the Designee of the Secretary of Revenue to determine the validity of the assessment pursuant to K.S.A. 79-5205. The assessment is statutorily presumed to be valid and correctly determined. The burden is on the taxpayer to prove otherwise.
The criminal prosecution for failure to pay the drug tax and the civil tax assessment are separate actions. What occurs with the criminal case, for instance, does not necessarily affect the Department of Revenue's tax assessment.